Marked rise in industrial credit disbursement
Siddique Islam | Monday, 25 August 2008
Industrial credit disbursement recorded a significant rise by over 66 per cent in the last fiscal against that of the previous fiscal (2006-07).
Bankers are hopeful about the continuation of the upward trend in industrial credit distribution due to growing credit demand from the power sector.
The disbursement of industrial term loans stood at Tk 206.10 billion in the fiscal 2007-08 (FY08). A total of Tk 123.81 billion was disbursed in the previous fiscal, according to the provisional estimation of the central bank.
Fresh credit, rescheduling of term loans and fund release for balancing modernisation, rehabilitation and expansion (BMRE) of industrial units are the main reasons for the hefty growth of industrial credit flow, officials said.
Besides, the credit flow increased in the last fiscal (FY08) for launching rehabilitation programmes to recover losses caused by floods and cyclone Sidr.
"Provisional data show that disbursement and recovery of industrial term loans by all banks in April-June period of FY08 rose by 77.4 per cent and 67.6 per cent respectively over the same quarter of FY07," the central bank said in its Bangladesh Bank Quarterly for April -June 2008.
The energy and power, telecommunications, pharmaceuticals, textile, housing, construction and transportation sectors have received the lion's share of the credit, they added.
"The upward trend in the industrial term loan disbursement will continue in the near future in line with the existing central bank monetary policy as well as the overall economic growth," a senior official of the Bangladesh Bank (BB) told the FE Sunday.
On July 17 last, the central bank unveiled its sixth half-yearly monetary policy that aims to achieve maximum economic growth through credit expansion to productive sectors during the current fiscal while keeping inflationary pressures under control.
Commercial bank officials also expect the uptrend in disbursement of term lending to continue in the near future in different sectors, including power, telecommunications and housing.
"The credit demand particularly in power sector will continue in the near future to meet the growing demand for electricity across the country," a senior official of a private commercial bank (PCB) told the FE.
He also said some PCBs and non-banking financial institutions (NBFIs) have already sanctioned a large amount of loan to power sector through syndication
"Banks, in some cases, are bound to convert their post import financing, generally known as loan against trust receipt (LTR), into term lending for avoiding classification of the loan," the official said while explaining the higher growth of such loans of the PCBs.
The PCBs disbursed Tk 136.41 billion as term loans in the last fiscal compared to Tk 75.34 billion of the previous fiscal, the BB's data showed.
On the other hand, the recovery of the term loan increased by 53.78 per cent in the last fiscal as the banks and financial institutions intensified their recovery drive in line with the Bangladesh Bank (BB) directives, officials said.
In fiscal FY08, the industrial credit recovery was Tk 139.23 billion compared to Tk 90.54 billion of the previous fiscal.
Bankers are hopeful about the continuation of the upward trend in industrial credit distribution due to growing credit demand from the power sector.
The disbursement of industrial term loans stood at Tk 206.10 billion in the fiscal 2007-08 (FY08). A total of Tk 123.81 billion was disbursed in the previous fiscal, according to the provisional estimation of the central bank.
Fresh credit, rescheduling of term loans and fund release for balancing modernisation, rehabilitation and expansion (BMRE) of industrial units are the main reasons for the hefty growth of industrial credit flow, officials said.
Besides, the credit flow increased in the last fiscal (FY08) for launching rehabilitation programmes to recover losses caused by floods and cyclone Sidr.
"Provisional data show that disbursement and recovery of industrial term loans by all banks in April-June period of FY08 rose by 77.4 per cent and 67.6 per cent respectively over the same quarter of FY07," the central bank said in its Bangladesh Bank Quarterly for April -June 2008.
The energy and power, telecommunications, pharmaceuticals, textile, housing, construction and transportation sectors have received the lion's share of the credit, they added.
"The upward trend in the industrial term loan disbursement will continue in the near future in line with the existing central bank monetary policy as well as the overall economic growth," a senior official of the Bangladesh Bank (BB) told the FE Sunday.
On July 17 last, the central bank unveiled its sixth half-yearly monetary policy that aims to achieve maximum economic growth through credit expansion to productive sectors during the current fiscal while keeping inflationary pressures under control.
Commercial bank officials also expect the uptrend in disbursement of term lending to continue in the near future in different sectors, including power, telecommunications and housing.
"The credit demand particularly in power sector will continue in the near future to meet the growing demand for electricity across the country," a senior official of a private commercial bank (PCB) told the FE.
He also said some PCBs and non-banking financial institutions (NBFIs) have already sanctioned a large amount of loan to power sector through syndication
"Banks, in some cases, are bound to convert their post import financing, generally known as loan against trust receipt (LTR), into term lending for avoiding classification of the loan," the official said while explaining the higher growth of such loans of the PCBs.
The PCBs disbursed Tk 136.41 billion as term loans in the last fiscal compared to Tk 75.34 billion of the previous fiscal, the BB's data showed.
On the other hand, the recovery of the term loan increased by 53.78 per cent in the last fiscal as the banks and financial institutions intensified their recovery drive in line with the Bangladesh Bank (BB) directives, officials said.
In fiscal FY08, the industrial credit recovery was Tk 139.23 billion compared to Tk 90.54 billion of the previous fiscal.